Planning & Designating Durable Power of Attorney
Most people know that an estate plan begins with a Last Will and Testament and the proper alignment of beneficiary designations (such as life insurance, IRA’s, 401(k)’s, annuities, etc.). Less attention is given to making sure your trusted family member of friend, has the ability to manage your affairs if you become incapacitated? Most every comprehensive estate plan ought to include a general durable power of attorney (or one of its more limiting or more narrowly drafted cousins). Under a power of attorney you name someone to conduct your business if you can’t. A power of attorney creates a principal-agent relationship and the agent only has the powers that are specifically given to the agent. Those powers can be broadly or narrowly drafted. Thus, an agent can be given the power to do essentially, everything or an agent’s authority may be limited to just paying bills. The idea is that should you lose your ability to manage your own affairs you can legally appoint somebody now to manage your business and personal affairs at that time. Obviously, the principal needs to appoint an agent (or agents) who they trust implicitly and who have demonstrated a pattern of good decision making. An agent appointed under a properly executed general durable power of attorney cannot make decisions regarding healthcare. Healthcare agents can only get appointed under a properly executed Health Care Proxy.
Power of Attorney FAQ’s
Why do I need a Durable Power of Attorney?
Naturally, we hope that we are always in a position to handle our own legal and financial decisions. If, however, we are rendered incapacitated and not able to make our own legal and financial decisions, then a Power of Attorney is invaluable. Should you not have a power of attorney in place it would be necessary for your spouse or a family member to enter into expensive and time-consuming court proceedings to obtain the rights to manage your legal and financial business. If the incapacitated person needs long term care, the failure to have the right power of attorney in place will have staggeringly expensive consequences as lost opportunities pile up while waiting for authority to manage the sick spouse’s or parent’s assets.
Who will be the Power of Attorney?
You choose the agent. It can be a family member, a trust friend or even a reputable not-for-profit corporation. You may choose an alternative Power of Attorney in case the first agent is not able or willing to act. You can choose multiple Power of Attorneys, that have to act together or can act separately. You can revoke or change your Power of Attorney at any time.
Because a Power of Attorney authorizes the agent to step into the shoes of the principal and, therefore, allows an agent to transfer, sell or dispose of property and otherwise manage his or her financial affairs, the agent should be a person the principal trusts implicitly.
How long does Durable Power of Attorney Last?
A power of attorney usually becomes effective immediately once signed and remains in effect during your lifetime unless you revoke it. You can always revoke a Power of Attorney, as long as you understand what you are doing when you revoke it.
What are the Benefits of Having a Power of Attorney in New York State?
The primary advantage is that you give your loved ones the ability to manage your care needs if you are temporarily or permanently incapacitated. Since New York State recently revised the general obligations law to provide, in essence, that an agent (or Power of Attorney) only has the powers specifically granted them in the instrument. Since the new law requires that principals specifically contemplate whether to give an agent the right to make gifts, foreign powers of attorney may unintentionally exclude this important asset protection tool. Every agent or power of attorney is not automatically authorized under current law to make gifts of the principal’s assets over a certain minimum for tax planning, asset protection or any other purpose, in the absence of a signed statutory gift rider. An updated general durable power of attorney with statutory gift rider is very often, an essential part of most of our custom estate plans. Naturally, these instruments turn in large part, upon the character and integrity of the appointed agent.
Contact the lawyers at Lacy Katzen to discuss estate planning and power of attorney to ensure your family and legal and financial matters are handled properly at 585.454.5650.